Ofgem launches consultation on standing charge

The energy regulator has called for input on the standing charge that is added to energy bills.

Ofgem wants to gather opinions on how it’s applied and if there are any viable alternatives.

What is the standing charge?

The standing charge is a daily fee that you pay your supplier to cover the cost of providing gas and electricity, regardless of how much energy you use.

It covers things like supplying and maintaining wires, pipes and cables.

The standing charge falls under the energy price cap, which means there’s a limit on how much suppliers can ask for. Suppliers don’t have to include a standing charge and can choose to make it less expensive than the limit set by the price cap.

Who can have their say?

Ofgem is calling for input from bill-payers, charities, consumer groups, businesses and suppliers.

It’s asking for all feedback to be submitted by Friday 19 January 2024.

A difficult balance

Tim Jarvis from Ofgem said:

“It’s a complex issue and while an upfront set fee to cover a supplier’s fixed costs works for some, it doesn’t work for others.

“Equally spreading the costs differently might help some but our previous analysis has found it can also penalise some really vulnerable households.

“So however we proceed, there is a difficult balance to be struck, which is why it is important as many people as possible respond to our call for input with their experiences of it, how it affects them and what the alternatives to it could be.”